Wednesday, June 21, 2006

How about a "coin of social exchange"?

I'm thinking recently about the philosophy behind 'running a business'. This is a very new area for me to explore, but this makes it more interesting to the exterior because I do not depend on historical views and teachings. :)

What I think is underlit is the social value that businesses could provide, but unfortunately cannot be expressed in any 'coin' or as a measure of value. How many businesses really provide social value nowadays, only for the purpose of providing that value, not just for money?

The customers of today are not the customers of 100 years ago. In that time, people were shopping for primary needs. Shovels, food, clothes to wear, etc... Money was created as a means to make social exchange easier. It has grown into having a life on its own almost.

Nowadays a large number of products are based on secondary needs and you could say 'tertiary' needs in some cases. Since society has evolved significantly in many countries. The intelligence of these customer has risen dramatically and also with this the desire for novelty. 10 years ago, browsing the Internet was a truly amazing experience for many, nowadays we shrug our shoulders.

If a company sets only monetary goals, but no social goals, it misses out on many things that a company could do. For example being a leader in corporate social responsibility and not just a follower of the law. Shift your company strategy and set social goals as your objective, all within the constraints of your financial capabilities. This stimulates innovation.

"Running a business" successfully does not necessarily and solely mean "making scandalous profits". That's however what American economics and views teach us. It can equally mean providing a sustainable point of interchange between a company and a consumer and expanding this business to new areas, seeing economy as something wider than utility and money, including social benefit as a type of currency in the equation.

You may become stinking rich if you play 'unfair', but at what cost?

If you do focus like no one else on your customers and consider your financial revenue as a secondary consequence, maybe then your company brand might actually mean something to customers! So, a successful formula for this view on business, in the order below:

1. Consider profit secondary to customer experience and feeling of fairness.
2. Maintain financial capabilities.
3. Be innovative with new products, because that will elevate the user experience. New things provide good novel experiences. Old things do not, unless offered in new ways.
4. Develop a brand.
5. Make sure you have one or two things that are slightly "evil" or "evil-obvious" in your policies, but not so evil that it outbalances the customer experience.
6. Back to 1.

The above points give an example of what I would consider "running a business". It doesn't focus on money-making, although it is an important aspect, the primary focus is its reputation and place in society. How do customers perceive you and what can be done about any negative views?

Example of considered-evil companies are software companies. Car companies are not seen as evil, even if they make good profits, because the company makes an effort each and every time when they produce the car. So it is reasonable and fair that the consumer pays for its acquisition. Software companies have made a moderate investment only in the beginning. But afterwards, the same charge is applied for the same software at zero cost of reproduction. This feels unfair, since no effort is spent for each and every company. That feels wrong (if it really is, is left to discussion).

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